S&P downgrades Royal Caribbean

S&P said it cut Royal Caribbean Cruises Ltd.’s issuer rating to B+ from BB and removed all of its ratings from CreditWatch, where they were placed with negative implications on June 4.

Concurrently, S&P downgraded the company’s senior secured notes and unsecured non-guaranteed debt by two notches to BB and B+, respectively, in conjunction with the downgrade. The 1 and 4 recovery ratings, respectively, remain unchanged.

The agency also lowered Royal Caribbean’s guaranteed unsecured notes and other guaranteed unsecured debt by one notch to BB- and changed the recovery ratings on the issues to 2, from 3 and 4, respectively, due to the downgrade.

“The downgrade reflects our updated forecast that Royal’s adjusted leverage will remain very high at about 10x or above through 2021 because of a protracted recovery in the cruise industry. We believe the cruise industry, and thus Royal may face an extended period of low demand because of weak economic conditions and consumer fears around traveling due to Covid-19 given the absence of a vaccine or effective medical treatment,” S&P said in a press release.

The outlook is negative.

Fitch rates Spirit Airlines notes BB+

Fitch said it assigned a rating of BB+/RR1 to Spirit Airlines, Inc.’s proposed $600 million of senior secured notes to be backed by its loyalty program, including revenues from its co-branded credit cards and $9 Fare Club, and associated intellectual property along with its brand IP. Fitch also affirmed Spirit’s issuer rating at BB-.

Fitch’s rating of BB+/RR1 on the proposed secured notes reflects the agency’s estimate that creditors would receive a superior recovery in a bankruptcy scenario. The BB+/RR1 rating is based on Fitch’s generic approach to assigning issue ratings for issuers rated in the BB category, which assumes that secured creditors will recover 91%-100% of principal value in a distress scenario,” the agency said in a press release.

Independent appraisals value the notes’ total collateral at $2.9 billion, Fitch said.

The outlook remains negative.

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